Despite advertising unlimited data, the company's various prepaid wireless brands "drastically slowed or cut off consumers’ mobile data after they used more than certain fixed limits in a 30-day period," the FTC said.

Further Reading

Further Reading

"Beginning today, consumers who had a Straight Talk, Net10, Simple Mobile, or Telcel America unlimited plan before January 2015 can visit http://ftc.gov/prepaidphones to file a claim for a refund," the commission said. "Refunds will be paid to consumers whose data service was slowed or cut off. Consumers who had an unlimited plan but are unsure if their data service was slowed or cut off should still file a claim to find out if they are eligible for a refund."

TracFone did not admit or deny guilt in the settlement. Besides agreeing to the financial penalty, TracFone was ordered to stop deceptive advertising of mobile data plans.

TracFone admitted in 2013 that it throttled unlimited data plans after customers hit 2.5GB of data in a month.

The FTC's complaint against the company says that TracFone has been promising unlimited talk, text, and data for $45 a month since 2009 under the brand names mentioned above.

"In numerous instances, TracFone failed to disclose or adequately disclose its practice of enforcing fixed limits on the amount of mobile data service its customers could use in a thirty-day service period," the FTC said. "In fact, until at least September 2013, TracFone did not state in most of its advertising or terms and conditions that it would suspend or throttle its customers’ mobile data service if they used more than a fixed amount of mobile data in a thirty-day service period. In September 2013, TracFone began to include this information for all of its 'unlimited' offerings, but often has tucked it away in small print that is not proximate to its claims of 'unlimited' mobile data service."

The data limits "were not driven by technological constraints" and were not "a response to real-time network congestion," according to the FTC. TracFone cut its customers off from network services in order to save money.

"As a reseller [of network access], TracFone must purchase the mobile data service that it sells to consumers from mobile network service providers," the FTC wrote. "Because TracFone offered its 'unlimited' mobile data service at a fixed price, more data usage by its customers meant more costs, and less profit, for TracFone."

TracFone is the largest prepaid mobile phone service provider in the US with about 25 million subscribers, of which about 25 percent subscribe to unlimited plans, the FTC said.

"The reduced speed from throttling significantly impaired the ability of many consumers to engage in online mobile activities. For example, throttled consumers often could not use mobile applications such as YouTube, Netflix, or Skype," the FTC complaint said.